Probe finds flaws with Florida owners' and breeders' group

An inspection of the embattled Florida Thoroughbred Breeders’ and Owners’ Association’s finances and internal records for 2009 and 2010 has revealed significant problems, according to the inspector’s report made public this week. But the organization’s president, Fred Brei, said Thursday that the report’s findings are old and that most of its recommendations were already under way in 2011.

Pam Mattox, a certified public accountant and member of the breeders’ and owners’ association who serves on the group’s financial committee, presented her findings on Aug. 17 to fellow committee members Bonnie Heath and Phil Matthews. According to her memo, the records inspection showed problems including inadequate accounting systems that could be manipulated, improper disposal of computer hard drives potentially containing members’ information, and a serious under-reporting of money allegedly embezzled by an association employee who has since been terminated.

Mattox’s inspection found that the association’s promotional trust, from which breeders’ awards are paid, used a manual system to process awards. That system theoretically could allow someone to modify its records, although the inspection apparently found no abuse. Mattox noted that “time has not permitted as extensive testing as should be performed.”

“The system that is in pace is unacceptable and also surprising,” Mattox wrote. “An organization with the longevity of the FTBOA that has an executive director and CFO positions has no excuse but to operate at a much more advanced level. The positions were not performing adequately.”

Regarding the embezzlement case, the association’s executive director, Richard Hancock, had informed the board nearly two years ago that a longtime employee had embezzled funds. But Mattox’s review indicated “an embezzlement in excess of $100,000, not $10,000 as presented by the executive director to the board,” and she called for a thorough investigation into the matter.

That state attorney is investigating the case, said Brei, who noted that the organization already was aware of and had moved to correct many of the problems Mattox found.

“Most everything she wrote we’d found back in March, April, and May,” Brei said. “We’ve dealt with most of what she wrote, because she was writing about ’09 and ’10, not about the current situation of FTBOA. The membership wanted this investigation of ’09 and ’10.”

Brei said one recommendation that the association hadn’t yet implemented was purchasing or developing software that would replace manual entry with automated download files and allow smooth integration of the group’s accounting across departments. Brei said the association is researching this and has asked The Jockey Club for a bid on developing that software.

“It was within seven to 10 months ago that we started getting an automatic dump from The Jockey Club on who ran first, second, and third for our awards program,” Brei said. “Before that, we were taking results off of hard copy, and that leaves too much room for mistakes. So now we have an automatic dump into a spreadsheet system. But that’s all it is: a spreadsheet. It shows us all the disbursements made and who they went to and so on, but it doesn’t dump back into our main system. So we’re looking for software that’s integrated.”

The Florida Thoroughbred Breeders’ and Owners’ Association has been under fire from members who have questioned its leadership, direction, and transparency, including financial disclosures.

Brei, whose term ends Oct. 13, announced in June that Hancock, a controversial figure among the association’s membership, would retire early from the position. His contract ends in August 2012. A search for his replacement is under way, Brei said Thursday, with several candidates likely for serious consideration within a week or two.